Emkay Global Financial's research report on Amara Raja Batteries
AMRJ’s Q3 EBITDA grew by 40% YoY to Rs4bn, 7% above our estimates, as benefits from easing commodity prices were higher than our expectations. However, the recent increase in lead prices is expected to hit margins in the near term. Revenue increased by 12% to Rs26.4bn, standing 2% below estimates. Factoring in the strong Q3 performance, we have increased our FY23E EPS by 5% and slightly increase FY24-25E EPS by 1%. Despite losing out in the PLI-ACC scheme, AMRJ plans to commence construction work on the lithium-ion cell manufacturing facility and production may commence after two years.
Outlook
However, as we do not see any near-term triggers, we retain HOLD with a TP of Rs575/share (Rs560/share), based on 11x FY25E EPS (Dec-24E earlier).
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